AUTHORITY FOR ADVANCE RULING

TAMILNADU ADVANCE RULING AUTHORITY

PAPJM Buildings, II Floor, No.1, Greams Road, Chennai-6

PROCEEDINGS OF THE AUTHORITY FOR ADVANCE RULING U/s.98 OF THE

GOODS AND SERVICES TAX ACT, 2OL7.

Members present are:

1. Ms. Manasa Gangotri Kata IRS., Joint Commissioner/Member,
Office of the Commissioner of GST & Central Excise. Chennai.

2. Thiru S. Vijayakumar, M.Sc., Joint Commissioner (CT)/Member (FAC),

Office of the Joint Commissioner (ST), Enforcement I
Inter-State Investigation Cell, Chennai-6.
ORDER No. 6/AAR/2O1,, DATED 22.O1.2O19
GSTIN Number, if any / User id Unregistered
Legal Name of Applicant M/s. Dream Runners Foundation Limited
Registered Address/Address provided C/o I{huzem Lal, Mulberry II Floor,
while obtaining user id New No.6, Old No.14, Second Cross Street,
Karpagam Gardens,
Advar. Chennai-600020
Details of Application GST ARA - O01 Application Sl.No. 12
dated: 27.O3.2OI8
Concerned Offrcer State : The Assistant Commissioner(ST)
Adyar Assessment Circle

Centre : Chennai South .Division: Advar

Nature of activity(s) (proposed /
present) in respect of which advance
ruling sought
A Category
B Description (in Brief)
Issue/s on which advance ruling
required
Question(s) on which advance ruling
is required
Service Provision
Dream Runners Foundation is a Charitable
Trust involved in charitable objects such as
Health ca-re, Rural Development, Women
Empowerment, Education facility etc.
Applicability of Notification No.I2l2Ol7
Central Tax (Rate) to claim exemption under
clause2(r) of the Notification
I. Whether the conduct of marathon events by
the Trust through which donations are raised
for charity is an exempted service under GST ?
ii. When the Trust is approved under Sec 12AA
of the Income Tax Act 196I, which means that
the service of the Trust is charitable in nature.

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 does it not automatically become a charitable
activity that is exempted under GST?
iii. As the service rendered by the Trust is a
charitable activity within the definition of
Clause 2(r) of Notification No. 12 / 2O17-Central
Tax (Rate), is registration under GST required?
iv) Are donations received from participants of
the marathon event exempted from GST as it
is money paid for conduct of a marathon event
for raising funds for charity?
Note : Any appeal against the advance ruling order shall be filed before the
Tamilnadu State Appellate Authority for Advance Ruling, Chennai
under Sub-section (lf of Section 1OO of CGST ACT/TNGST Act 2OL7
within 30 days from the date on which the ruling sought to be appealed
against is communicated.

At the outset, we would like to make it clear that the provisions of both
the Central Goods and Seruice Tax Act and the Tamil Nadu Goods and Senrice
Tax Act are the same except for certain provisions. Therefore, unless a mention
is specifically made to such dissimilar provisions, a reference to the Central
Goods and Senrice Tax Act would also mean a reference to the same provisions
under the Tamil Nadu Goods and Senrice Tax Act.

M/s. Dream Runners Foundation, Cf o Khuzem Lal, Mulberry II Floor, New

No.6, Old No.14, Second Cross Street, Karpagam Gardens, Adyar, Chennai-600020
(hereinafter called as Trust or Applicant) is not registered under GST. They have
stated to have engaged in conducting public charitable activities such as Health
care, Rural development, Women empowerment, Education facility etc, either
directly or through various public charitable institutions for the common good of the
general public of and in India, irrespective of caste, religion, creed, gender and
without any motive for profit. The Applicant has sought Advance ruling on the
following questions:
I. Whether the conduct of marathon events by the Trust through which
donations are raised for charity is an exempted service under GST?
ii. When the Trust is approved under Sec 12AA of the Income Tax Act 1961
which means that the service of the Trust is charitable in nature, does it not
automatically become a charitable activity that is exempted under GST?
iii. As the service rendered by the Trust is a charitable activity within the
definition of Clause 2(r) of Notification No.I2/2O17-Central Tax (Rate), is
registration under GST required?

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 iv) Are donations received from participants of the marathon event exempted
from GST as it is money paid for conduct of a marathon event for raising
funds for charity?
The Applicant has submitted the copy of application in Form GST ARA - 01 and also
submitted a copy of Challan evidencing payment of application fees of Rs.S,OOO/-
each under sub-rule (1) of Rule 104 of CGST rules 2OI7 and SGST Rules 2077 .

2.7 The Applicant has submitted that the principal objects of the Trust along
with other requirements, are covered by a Trust Deed dated 7th June 2013 that was
duly registered and notarized. The principal objects of the Trust as per the Trust
Deed is to organize events like Marathon, Blood Donation Camp, Organ Donation
Camp, Eye Donation Camp, Health Awareness Camp etc and ulilize the funds raised
from such events for Charitable Cause like funding to Non-Governmental
Organizations (NGOs), Hospitals, Trusts and other Charitable Organizations. Apart
from the above the Applicant also conducts camps, seminars, meetings, publicity
and prevention for terminal illness like cancer, AIDS etc., and they also promote,
administer, support, maintain and or grant aid to any NGO's institutions or
organizations having similar objectives like the Applicant in India. The Applicant has
also stated that each of the mentioned objectives shall be independent of each other
and none of the objects involve carrying of any business, trade or any activity for
profit.

2.2 The Applicant has stated that the Trust was registered under Sec I2AA of tJ:e
Income Tax Act, 196I vide the application entered at DIT(E)No.2(22I)l13-
14/SI.No.299/13-14 dated 3O.L2.2O13 issued by the Directorate of Income Tax
(Exemptions), Chennai. Donations to the Trust are also exempted from tax under
Section 80G of the Income Tax Act 1961, Vide the approval of The Office of the
Director of Income Tax (Exemptions) under reference DIT (E) No 2(22I) I 13- 14 dated
16 July 2074. In line with the stated objects, the Trust had organized and
conducted every year a marathon event named Dream Runners HaIf Marathon since
2OI2. The event involved collecting donations from the participating runners and
also money pooled in through corporate donations for the event. The amount so
received is utilized for the conduct of the event that includes permit and approval
fees, fees paid to the government authorities, expenses for the conduct of the event
that includes prize money for the winners and the balance left is paid as donations
to the NGOs supporting the cause or directly to the beneficiaries.

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 2.3 The Applicant has further stated that they conduct event always for a public
cause. The cause for the last three editions was for prosthetic legs. The net proceeds
of the event were, for the last three yea-rs, donated to Freedom Trust, a NGO engaged
in providing prosthetic limbs to the less privileged public in Tamil Nadu apart from
direct beneficiaries like Awai Home, a school for poor and orphans and Olcott
Memorial School. The accounts of the Trust are duly audited and annual audited
statements are filed with the concerned authorities including the filing of return
with the Income Tax authorities. The details of the donations raised from past three
marathon events conducted for the cause and the net amount donated from the
proceeds of the event as submitted by the Applicant is tabulated as under:
(Amount Rs)

Total Donations Net Amount Donated

linancial Year
'eceived
20 15- 16 53,95,500 6,90,000
2016-17 53.66,250 8,98,884
2017-18 63,rr,967 7,69,250
iEstimated)

2.4 The Applicant has also submitted that

under the Service Tax regime Vide
Notilication No. 25l2OI2- Service Tax dated- 20t}r June 2OI2, as amended by
incorporating changes made till issuance of Notification no Lol20l7-Service Tax
dated 8-3-2OI7, tk-e Central Government, under Para 4 exempted the services by an
entity registered under section l2AA of the Income Tax Act, L.96I (43 of 1961) by
way of charitable activities from the whole of the service tax leviable thereon under
section 6613 of the said Act. The activities of the Trust were not under the purview of
Service Tax legislations as it satisfied the conditions, for exemption viz

i. Services provided by the entity registered u/s 12AA of Income Tax Act, I96L,
and
ii. Services were charitable activities delined as the principal objects of the trust.
Hence no Service Tax was collected on donations received front the participants of
the marathon event as it was considered as a charitable activity under Service Tax.
The Applicant is of the view that Charitable Trusts, which are registered under
Section 72AA of Income Tax are also Trttst ttnder GST. The benefit of excmption
under Sl. No. 1 of Notifrcation No L2/2O17 Central Tax (Rate) as amended is to
charitable activities as delined under Clause 2(r) of the notification. The activities of
raising funds for charity through conduct of events like Marathon, Blood Donation,
Organ Donation Camp, Eye Donation Camp, Health awareness camp and utilize the

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 funds raised from such events for charitable cause like funding to Non-government
Organizations, Hospitals. The receipt of money from participants of the event is in
the form of donation. . After meeting expenses for the conduct of the event, the net
proceeds are contributed to a cause for which the event is conducted. The cause for
the support of providing prosthetic legs is covered under the definition of charitable
activities as "(i) public health by way of (A) care or counselling of (i) terminally ill
persons or persons with severe physical or mental disability" Thus , Their activities of
the trust by conducting marathon events is to be considered as a charitable activity
exempted from the le'"y of GST vide Notification No.I2l2O17 Central Tax(Rate) as
amended on the amounts collected from the participants.

3.1 The Authoized Representative of the Applicant was heard in the matter.
They have stated that they conduct marathon events for seeking donations to
charitable activities. They have stated that they email receipts to the participants to
qualify for the 80G certificate of Income Tax. They have also informed that the money
is collected by the registration partner who is paid a part of the collection for use of
their portal. They submitted order under Section I2AA, approval under Section 80G
of Income Tax Act, Trust Deed, balance sheets, income tax returns, sample receipts
given for donations to the trust, publicity brochure for the dream runners marathon,
sample receipt to a participant of the marathon. The Applicant have also submitted a
write up for flow of donations and funds from both individua-ls and corporate
sponsorships for the event.

3.2. In the write-up, they have stated that they have a service partner
(youtoocanrun), who is engaged to provide registration portal, data from back end for
flow of and number of runners registered by gathering all the personal data of the
runners. As the Applicant does not have a payment gateway of his own, the payment
gateway of the registration partner is used to collect the donation contribution by the
individual runners registering for the event. The individual participants log in their
website and through the registration link provided by the Registration partner
( youtoocanrun), the donation contribution of the individual customer is collected.
The registration partner generates an online donation receipt in the name of
foundation as money received by the Foundation giving PAN and 80G registration
number of the Foundation. The same after deducting 60/o as charges, for payment
gateway charges and charges for use of portal, is deposited to the Trust account. In
respect of the bulk registrations from employees of corporate and running groups,
the money is deposited by bank transfer or cheques into the designated bank

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 account of the Foundations and no service charges are paid to youtoocanrun. Apart
from the above, the foundation has contracts entered with Corporates for Title and
other Sponsorships at rates mutually agreed upon between the Foundation and the
Sponsors, the amounts of which are deposited in the Trust account.

4. On verification of the documents submitted. it is seen that Dream Runners

Foundation is a Trust formed in 2013, ,registered as a public charitable trust with
Income Tax, with the objective to organize events like Marathon, Blood Donation
Camp, Organ Donation Camp, Eye Donation Camp, Health Awareness Camp etc.
and utilize the funds raised from such events for Charitable Cause like funding to
Non-Governmental Organizations (NGOs), Hospitals, Trusts and other Charitable
Organizations, to conducts carnps, seminars, meetings, publicity and prevention for
terminal illness like cancer, AIDS etc., and to promote, administer, support,
maintain and or grant aid to any NGO's institutions or organizations having similar
objectives like the Applicant in India. The trustees can accept donation, grants,
subscriptions, contributions from any person, organization etc. It is seen from the IT
returns that the Applicant are filling 'nif income. As per balance sheet it is seen that
they are showing income from "Donations received for Marathon and other events".
They are showing under operational expenses various amounts pertaining to
"Donation paid(cash)", "Donation paid (Material and kind)", " Marathon Event
Expenses", " Material purchased for Marathon event", "event management", " Misc.
expenses" , "pize money for marathon events" , "promotion expenses "etc. It is seen
that out of all the amounts shown as operational expenses, a majority of the
amounts are under ttre heads of "Marathon Event Expenses", "Material purchased
for Marathon event", "event management", "Misc. expenses", "and prize money for
marathon events" and only a small portion is towards "Donations paid". The
Applicant has also furnished the approximate amounts of Total donations received
versus net amount donated as shown in Para 2.3 above. It is seen from the publicity
brochure thatit is being advertised as an annual fund-raiser event of the Dream
runner Foundation to support the cause of providing prosthetic legs for the under -
privileged and financial aid to schools in need. Around 5000 runners participate in
the event, which was originally formed by a group of motivated runners. The Dream
Runners half Marathon was ranked number 2 in the India among all races. The
event is meant to bring about awareness about wellness and hea-lth. There are also
various dream runners chapters in various parts of Chennai.

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 It is seen from the sample receipt for donation given, in some cases the
Applicant is directly issuing letters to participants in the Dream Runners Marathon
treating it as a "donation" and stating that such donations are qualified for deduction
under Section 80G of IT Act. In other cases, emails are sent to those who register
online, giving a registration number for "hosting them for the running event". The
email indicates that a donation is received towards the specific event of Dream
runners Marathon. The amount collected per participantwas Rs 12O0 for 2018, Rs
950 in 2076, Rs 9OO in 20 15 etc.
The issues raised in the present application and to be determined are
i. Whether the conduct of marathon events by the Applicant who is a Trust
approved under Section I2AA of the Income Tax Act 1961 through which donations
are raised for charity is an exempted service under GST?
ii. When the Trust is approved under Sec 12AA of the Income TaxAct 1961 which
means that the service of the Trust is charitable in nature. does it not automaticallv
become a charitable activity that is exempted under GST?

iii. As the service rendered by the Trust is a charitable activity within the definition of
Clause 2(r) of Notification No.12/2017-Central Tax (Rate), is registration under GST
required?
iv) Are donations received from participants of the marathon event exempted from
GST as it is money paid for conduct of a marathon event for raising funds for
charity?
5.1 It is clear that the Applicant is a Trust with the object to organize events for
charitable Cause like Marathon, Blood Donation Camp, Organ Donation Camp, Eye
Donation Camp, Health Awareness Camp, Etc., and lutilize the fund raised for the
charitable cause like funding to Non-Governmental Organisations(NGOs), Hospitals,
Trust and other Charitable Organizations. They are registered under Section l2AA
of the Income Tax Act 1961 and the receipts are exempted under Section 80 G of
the Income Tax Act. The Applicant is conducting Marathon and the receipts of the
event are utilized for conduct of the event and the balance left is donated to the
cause for the support of providing prosthetic legs.

5.2 In the instant case, the Applicant collects an amount from participants
donations It is seen from the
registered to for the marathon, treating them as
balance sheet that From these collected amounts, the expenses of paying the
registration partner, event management expenses, prize money, expenses for

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conducting the marathon, are met and some portion of the balance is given as
donation for various activities such as donating to Freedom Trust, a NGO who in
turn provide prosthetic limbs to the less privileged public in Tamil Nadu apart from
direct beneficiaries like Awai Home, a school for poor and orphans and Olcott
Memorial School. The activity in question is the Applicant organizing a Marathon.
This is advertised as Dream Runners Marathon where a large number of persons
participate. Though the money collected from the participants maybe donated or
used for further charitable activities, organizing marathon itself is a separate supply
of service by the Applicant for the various participants, individuals or runner groups
etc.

5.3 As per Section 2(31) of CGST Act,

" (31) "consideration" in relation to the supply of goods or services or both
includes-
(a) any payment made or to be made, whether in money or otherwise, in respect of,
in response to, or for the inducement of the supply of goods or services or both,
whether by the recipient or by any other person but shall not include any subsidy
given by the Central Government or a State Government;"

The money coilected by the Applicant, from the participant in the Marathon is used
for the expenses of organizing the Marathon in terms of paying the registration
partner, event management charges, prize money, publicity, other organizing
expenses such as T-shirts, banners and other related materials etc. as seen in their
balance sheets. Therefore, the money collected from the participants is a
consideration towards the supply of service of organizing and conducting the
marathon for the participant's conduct of marathon event and the same is liable to
GST.

5.4 The Applicant has claimed that their activities are exempted under Sl.No. 1 of
Notification No.I2/2o17-Central Tax (Rate) dated 28th June 2OI7. The relevant
extract of Sl.No. 1 of Notification No. 12l2Ol7-C.T. (Rate) dated 28ft June 2OI7 and
the relevant definitions are extracted below for ease of reference:

Sl.No Chapter, Section, Description of Servrces Rate (per Condition

Heading, Group or cent.)
Service Code
('l'ariff)
1 Chapter 99 Services by an entity Nil Nil
registered under section
I2AA of the Income-tax Act,
196l (43 of 1961) by way of
charitable activities.

Page 8 of 11
 2. Defi"nitions. - For the purposes of this notiftcation, unless the context othertuise
requires, -
(r) "charitable actiuities" meens actiuities relating to -
(i) public health bg wag of ,-
(A) care or counseling of
(I) terminallg ill persons or persons with seuere phgsical or
mental disabilitg;
(II) persons affiicted u;ith HIV or AIDS;
(III)persons addicted to a dependence-forming substance
such as narcotics dntgs or alcohol; or
(B)public au)areness of preuentiue health, familg planning or
preuention of HIV infection;
(ii) aduancement of religion, spiritualitg or Aoga;
(iii) aduancement of educational programmes or skill deuelopment relating
to,-
(A) abandoned, orphaned or homeless children;
(B) phgsicallg or mentallg abused and traumatized persons;
(C)prisoners; or
(D) persons ouer the age of 65 Aears residing in a rural area;
(iu) preseruation of enuironment including utatershed, forests and
ruitdlife;

The Applicant is an entity registered under Section l2AA of Income Tax Act.
However, for the purposes of CGST Notification No. 12l2O17-C.T.(Rate) dated 2gtt'
June 2017 and SGST Notification No.II(2)/CTR/532(d-15lr/2017 vide G.O. (Ms) No. 73
dated 29.06.2017, only those activities of such an entity are exempt from GST which
qualify under the defrnition of "charitable activities" given in the notification. This
activity of conduct of Marathon event by the Applicant does not fall under the
definition for Charitable activities mentioned under clause 2(rl of Noti{ication
12l2OI7 Central Tax(Rate) dated 28rh June 2Ol7 and Notilication
No.II(2)/CTR/532(d-151/2017 vide c.O. (M") No. 73 dated 29.06.2017,. Therefore,
though the Applicant is an entity registered under Section 12 AA of the Income Tax
Act and conducts the Marathon events for raising funds for charitable activities, the
exemption under Sl.No. 1 of these notification does not apply to the activity of
organizing the marathon by the Applicant.

5.5 As per Section 22 of CGST/TNGST Act, every supplier shall be liable to be

registered under this Act in the State or Union territory, other than special category
States, from where he makes a taxable supply of goods or services or both, if his

Page 9 of 11
aggregate turnover in a financial year exceeds twenty lakh rupees. In the instant
case, the Applicant's annual turnover is more than Rs 20 lakhs and they are
providing the taxable supply of organizing marathon events. Hence, they are liable to
register under CGST /TNGST Act.

6. In view of the foregoing, we rule as under:

RULING

The conduct of Marathon event by the Applicant for the participants is a not
an exempt supply under CGST/TNGST Act
11. Only those activities of Applicant, who is a Trust is under Sec 12AA of the
Income Tax Act 7961, which fall under the definition of "charitable activities"
as per Clause 2(r) of Notification 12l2017 Central Tax(Rate) dated 28th June
2OI7 and Notification No.II(2)/CTR/532(d-15)12017 vide G.O. (Ms) No. 73 dated
29.O6.2OL7 are exempt.

111. As the Applicant is supplying taxable supply of services such as organizing

marathon etc. and has aggregate turnover in a financial year exceeding twenty
lakh rupees, the Applicant is required to be registered under CGST/TNGST
Act.

lV. The money collected from the participants for conduct of the Marathon in the
event organized by the Applicant and therefore is not exempted from
CGST/ SGST.
/.

K K"---"^
Ms. Manasa Gangotri Kata,IRS
r-
-,t
t-*

dnri. s.vi;uyakumar, M.S;

- -t
t' )
Member Member (FAC)

AL! i'iioiii T"./ FO R

To i\DVAFICE RULING
M/s. Dream Runners Foundation, .; .
t I tl
I L i.lin
C/O KHUZEMLAL,
Mulberry II Floor, GOCDS AND SERVICE TAX
"farrrilnatl tt
C ltcrrrrai-6,
New No. 6, Old No. 14, Second Cross Street,
Karpagam Gardens,
Adayar,
Chennai- 600 020 / By Speed Post with Ack. Due /

Page 10 of 11
Copy Submitted to:

'1,. The Additional Chief Secretary Commissioner of Commercial Taxes,

/
II Floor, Ezhilagarn, Chepauk, Chennai-600 005.

2. The Principal Chief Commissioner of GST & Central Excise,

No 26/'J,, Mahatma Gandhi Road, Nungambakkam, Chennai-600034.

Copy to:
3. The Assistant Commissioner (ST)
Adyar Assessment Circle,
46,Pasumpon Muthuramalingam Salai,
Taluk Office Building,
RA Puram,
Chennai - 600 028

4. The Comrnissioner of GST & C.Ex..

i
Chenna Sou th Commissi'onera te,

5. Master File/ Spare-2.

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